Wilson v. Depuy International Ltd.

2018 BCSC 1192 Wilson v. Depuy International Ltd.

IN THE SUPREME COURT OF BRITISH COLUMBIA Citation: Wilson v. Depuy International Ltd., 2018 BCSC 1192 Date: 20180716 Docket: S116652 Registry: Vancouver Between: Theodore Wilson Plaintiff And Depuy International Ltd., Depuy Orthopaedics Inc., Depuy, Inc, and Johnson & Johnson Inc. Defendants Brought under the Class Proceedings Act, R.S.B.C. 1996, c. 50 Corrected Judgment: The text of the judgment was corrected at para. 48 where changes were made on July 20, 2018 Before: The Honourable Mr. Justice Branch Reasons for Judgment Counsel for the Plaintiff: D. Lennox Counsel for the Defendants: G. McKee R. Reinertson J. Les Counsel for the Intervenors: W. Kim M. McPhee Place and Date of Hearing: Vancouver, B.C. May 31, 2018 Place and Date of Judgment: Vancouver, B.C. July 16, 2018 Table of Contents I. INTRODUCTION. 4 II. BACKGROUND. 4 A. Nature of the Product 4 B. Nature of the Class. 4 C. Litigation History. 5 D. Other Canadian Litigation. 6 E. International Litigation. 9 F. Key Terms of the B.C. Settlement Agreement 9 (1) Scope of the Class. 9 (2) Individual Claims Process. 10 (3) Most Favoured Nations Clause. 11 (4) Notice and Administration Costs. 13 (6) Estate Claims. 13 (7) Claims Administrator 13 (5) Contribution towards Fees. 14 G. Government Recovery Claims. 14 III. ANALYSIS. 15 A. Class Certification. 15 B. Settlement Approval 16 (1) The Likelihood of Recovery or Success.

19 (2) The Amount and Nature of Discovery Evidence. 19 (3) The Settlement Terms and Conditions. 20 (4) Recommendations of Neutral Parties, If Any. 21 (5) Recommendations and Experience of Counsel 21 (6) Future Expense and Likely Duration of Litigation. 21 (7) Number of Objectors and Nature of Objections. 21 (8) Presence of Good Faith and Absence of Collusion. 21 (9) Conclusion on Merits of Settlement 22 C. The Multijurisdictional Issue. 23 (1) Overlapping Classes. 24 (2) Disruption of Counsel Agreements. 26 (3) Judicial Comity. 28 (4) Disruption to Solicitor-Client Type Relationship. 29 (5) Encouraging "Race to the Bottom" Settlements. 30 (6) The Rights of Other Provincial Governments. 31 (7) Factors Supporting Certification of the Opt-in Class. 32 (8) Conclusion on the Opt-in Class. 32 D. Counsel Fees. 32 E. Notice Approval 35 IV. CONCLUSION. 35 I. INTRODUCTION [1] This is an application for certification and approval of a proposed class action settlement (the "B.C. Settlement"), as well as for approval of counsel fees and disbursements. [2] Notably, this certification and settlement proposes to potentially include certain residents outside British Columbia, notwithstanding that these persons are already members of a class certified by the Ontario Superior Court. For the reasons expressed below, I am not prepared to certify a class that includes such individuals. However, I am

otherwise prepared to grant the order requested, with one change to the class counsel fee structure. II. BACKGROUND A. Nature of the Product [3] This case involves an allegedly defective hip implant system. The defendants' products, the DePuy ASR XL Acetabular Hip System and the DePuy ASR Hip Resurfacing System (the "ASR System"), were sold in Canada between July 2003 and August 2010, at which point it was subject to a worldwide recall. [4] The plaintiff alleges that the defendants' product has an unreasonably high propensity for premature failure, causing injury to class members. [5] The usual medical treatment for failure of the ASR System is revision surgery, in which the implant is removed and replaced with a new device. B. Nature of the Class [6] The representative plaintiff, Mr. Wilson, was implanted with an ASR System on January 28, 2005. His product failed two years later, and he underwent surgeries on February 19, 2007 and May 14, 2007, to remove and replace it. The experiences of the other class member affiants were similar. On average, these class members' implants lasted only 3.5 years before revision surgery was required. [7] Known sales of the ASR System across Canada were as follows: Province Sales of ASR Acetabular Cups by Province based on location of Hospital British Columbia 113 Alberta 44 Saskatchewan 3 Ontario 317 Quebec 875 New Brunswick 1 Nova

Scotia 45 Total: 1398 [8] There is some uncertainty as to the number of British Columbians who experienced product failure. While the total number of sales in this province based on hospital location is known, accurate data as to the number of revision surgeries involving the ASR Systems in this province remains unknown at this time. The Canadian Institute for Health Information maintains a Canadian Joint Replacement Registry, but this registry does not publish data on failure rates attributed to specific hip implant brands. Class counsel has been working with the B.C. Ministry of Health to identify revision surgeries in this province known to the Ministry, but this work is ongoing. In any event, this number is not static, as more revision surgeries may occur in the future. C. Litigation History [9] This action was commenced on October 5, 2011, on behalf of all residents of B.C. and elsewhere in Canada who were implanted with an ASR System. Shortly thereafter, Mr. Wilson's counsel learned that sales of the defendants' product in B.C. were relatively small in comparison to other provinces. Mr. Wilson was advised by his counsel that he should wait on the outcome of the larger class actions filed in Quebec and Ontario (the "Quebec Action" and the "Ontario Action", respectively). [10] Mr. Wilson was content with this "wait and see" strategy for several years, but in 2017, as he

reached the 10th anniversary of his surgery, he sought a more aggressive approach. Mr. Wilson was advised by his counsel that the Quebec Action was scheduled to proceed to trial in April 2018, and that, while it could go well for the plaintiffs, there are risks with any trial, and whatever happened in Quebec was outside Mr. Wilson's control. Having considered these factors, Mr. Wilson instructed his counsel to pursue direct settlement negotiations with the defendants. Those discussions were eventually successful, and yielded the settlement before the Court. [11] His next step was to seek to certify the case and approve the proposed settlement. On February 21, 2018, this Court ordered that a "Notice of Hearing on Class Certification and Settlement Approval" be distributed. The Notice was distributed in accordance with that order, with one qualification. The order permitted counsel to specifically notify class members identified by the B.C. Ministry of Health from the Ministry's records. As noted, counsel has been working with the Ministry to generate a list of such individuals, but this work is ongoing and has not yet been completed. [12] On May 17, 2018, this Court heard and granted an intervention motion by the representative plaintiffs in the Ontario Action (the "Intervenors"): Wilson v. Depuy International Ltd., 2018 BCSC 854. [13] The only objection to the present motion

came from the Intervenors. D. Other Canadian Litigation [14] The Ontario Action was commenced on December 30, 2010, several months before the present proceeding. The motion record for certification was filed on August 25, 2011, again before the present proceeding was launched. The Ontario Action was certified on August 27, 2013: Crisante v. DePuy Orthopaedics Inc., 2013 ONSC 5186. The Ontario Action excludes residents of B.C. and Quebec, but otherwise covers the entire country on an opt-out basis. [15] The plaintiff in B.C. did not seek to intervene in the Ontario certification process to request that the Ontario class be narrowed to avoid overlap with his own proposed national class. [16] The Ontario court was well aware of the implications of certifying a "near-national" opt-out class. Indeed, there was a detailed discussion about the proper basis upon which to do so: Place of implant or place of residency? [29] The defendants argue that membership in the class should be determined based on where a class member was implanted with the DePuy Implant. To this end, they argue the word "resident", in the class definition, should be replaced with "implanted". The defendants acknowledge, however, that some people who live in one province were implanted in another province. [30] The plaintiffs point out that if the class in this action is defined as based on implant location, certain

individuals who would otherwise be members of the Ontario class might slip through the cracks. The concurrent B.C. and Quebec actions against the defendants use the "resident" indicator - that is, they purport to represent individuals "resident" or "in" their respective provinces. However, suppose the Ontario class is defined as those individuals "implanted" outside of B.C. and Quebec. Then an individual who was implanted in Quebec or B.C. but not normally resident in B.C. or Quebec may fall outside the Ontario, Quebec, and B.C. classes. This individual's only alternative would be to opt-in to the B.C. or Quebec action if a national opt-in class is certified. However, such an approach would deny that individual the benefits of the opt-out provision of the CPA. [31] Further, say the plaintiffs, not all family law statutes provide damages for derivative claims where the primary claimant is injured but not killed. If an Ontario resident was implanted outside of Ontario and is forced to opt-in to a B.C. national class, her family members might be denied statutory claims that would otherwise be available had she commenced an individual action in Ontario. [32] In my view, little turns on which identifier is used. Either one can work. On balance, however, I more persuaded by the plaintiffs' position. The term "resident" is not overbroad or vague, and has been adopted in certified

class definitions of other pharmaceutical and medical device class actions. The medical device cases where class membership was determined based on implant rather than residency involved national classes - all individuals who had been "implanted in Canada" with the device in question. The possibility of class members falling through the cracks of concurrent class definitions did not arise in those cases. In contrast, in Taylor v. Canada, which involved a medical device and a limited class, the court certified a class consisting of "all persons resident in Canada, except those residing in British Columbia or Quebec, who were implanted from [May 1983] to present with [a particular] joint medical device ..." [33] I find that place of residency is a sufficiently objective and workable membership identifier. [Emphasis added. Footnotes omitted.] [17] The discovery process is ongoing in the Ontario Action. There have been settlement talks, but those have been unsuccessful. [18] The Quebec Action was commenced in December 2010, and is restricted to Quebec residents. The Quebec Action was authorized to proceed as a class proceeding on May 13, 2014: Dick c. Johnson & Johnson Inc., 2014 QCCS 2301. Again, the plaintiff in B.C. did not seek to intervene in the Quebec authorization process to request that the Quebec class be narrowed in light of the overlap with the plaintiff's own proposed

national class. [19] More recently, with trial looming in Quebec, a settlement was negotiated and approved on May 22, 2018: Dick c. Johnson & Johnson Inc., 2018 QCCS 2130 (the "Quebec Settlement"). The Quebec Settlement is for a lump sum of $20 million, inclusive of fees, disbursements, notice, administration costs, health care costs, and payments to the funding agency the Fonds d'aide aux actions collectives (the "Fonds"). The lump sum approach has certain advantages under Quebec law which are not applicable in B.C. In particular, payments owing to the Fonds can be minimized by designing an efficient lump sum distribution process, rather than individual class members being charged a higher rate by the Fonds on individual recoveries made in a claims-made structure. [20] The Quebec Settlement creates three categories of claimant, based on the severity of injury. There are no guaranteed values assigned to these categories, as this will depend on the number and severity of all claims. Category 2 claims will be paid 30% more than Category 1, and Category 3 claims will be paid 60% more than Category 1. Category 3 claims have a maximum upper limit of $225,000. The use of a lump sum fund creates the potential need for proration if the settlement is oversubscribed. [21] The Quebec Settlement allows up to 11 years for revisions to occur for eligibility. It provides a $20,000 up-front

payment to claimants within 60 days of approval of their claim, a second distribution of 50% of the remaining value of the fund on July 29, 2019, and a final distribution of remaining settlement funds on October 25, 2021. E. International Litigation [22] There has been parallel litigation in the U.S. and Australia. [23] In the U.S., a mass settlement of ASR System claims (the "U.S. Settlement") was reached following two individual jury trials, one of which the plaintiff won with the jury awarding $8.3 million, and the other which the plaintiff lost. The U.S. Settlement has a claims-made structure. The U.S. Settlement values are substantially higher than those in the B.C. Settlement. The U.S. Settlement provides for a base payment in the range of $250,000. However, it applies a steeper discount to revision claims more than five years after the original surgery. [24] In Australia, a 17-week long trial in a representative action occurred in 2015. In June 2016, while judgment was under reserve, the parties negotiated a settlement. The settlement was approved in Stanford v. DePuy International Ltd. (No. 6), [2016] FCA 1452. The Australian settlement provides two options to class members. There is an expedited payment of $55,000 AUD to class members who want their claims paid immediately, or there is the prospect of a potentially larger payment for class members who are content to

wait upon the results of an individual assessment process. The Australian settlement provides compensation up to 13 years after the initial implant. F. Key Terms of the B.C. Settlement Agreement (1) Scope of the Class [25] B.C. residents are obviously included in the proposed class. But the proposed structure also allows Canadian non-residents other than those in Quebec to opt-in to the B.C. proceeding. This opt-in right terminates for residents of jurisdictions covered by a future settlement or trial. [26] More specifically, the proposed class is framed as follows: (1) all persons resident in British Columbia, or elsewhere in Canada and who are not members of the Quebec ASR Class, who underwent the surgical implantation of the ASR™ XL Acetabular Hip System or ASR™ Hip Resurfacing System in a surgery occurring in Canada ("ASR Index Surgery"), which class is comprised of (a) a BC Resident Opt-Out Subclass, and (b) a Non-BC Resident Opt-In Subclass. (2) all residents of Canada asserting the right to sue the Defendants independently or derivatively by reason of their familial relationship to a Class Member under either the common law or Family Compensation Act applicable to the BC Resident Opt-Out Subclass, or for Non-BC Resident Opt-In Subclass members, those defined pursuant to section 61(1) of the Family Law Act, R.S.O. 1990, c. F.3 as amended (or any similar legislation in any

of the Canadian provinces and territories or the Civil Law of Quebec). [27] If class members opt-in to the BC Settlement, that individual's claim against the defendants is released. (2) Individual Claims Process [28] The B.C. Settlement is in the form of an uncapped claims-made structure. The amount of compensation varies with the nature of a class member's individual claim. Generally: a) A class member will receive $100,000 for a single revision surgery or $120,000 for a bilateral revision surgery, so long as those surgeries took place more than six months, but less than ten years, after implant. b) There are discounts if the implant was in place for more than five years prior to revision, or where the class member was over 70 at first implantation. c) Additional payments of up to $40,000 are available for medical complications, including payments of up to $10,000 for loss of income. d) The spouse of a class member is entitled to compensation of $5,000 for his or her in-trust claim. e) B.C. class members who paid for the defendants' product out-of-pocket are entitled to a 50% refund on that cost. This expense will typically run several thousand dollars. Unlike other provinces, the ASR System was considered a premium product not covered by the B.C. health insurer. f) The class member does not have to prove that the implant they received was defective or the cause of the failure

of their implant. [29] In sum then, the maximum payment to an eligible class member and their spouse, not factoring in the impact of the most favoured nations clause discussed below, could reach approximately $167,000. [30] Eligibility for compensation under this settlement agreement is established by the class members' medical records. The class member is required to provide medical documentation showing proof of the original implant and proof of revision. [31] There are some exclusions from eligibility. Trauma-related revisions, such as where the implant failed as a result of a car accident, are not covered. As noted, revisions within the first six months of implantation are not covered, as evidence suggests these would relate to infection or surgical error rather than any product defect. [32] The determination of eligibility is made by a claims administrator. There is an appeal process available to the individual class member or the defendants if either disagrees with the claims administrator's decision. The continued involvement of the defendant in the processing of the claims is not ideal from the perspective of the class, but the eligibility limitations are sufficiently clear, such that I expect such appeals will be limited. Counsel advised that this was certainly the case in the Zimmer litigation, which had a similar structure: Jones v. Zimmer GMBH, 2011 BCSC 1198, aff'd

2013 BCCA 21, settlement approved 2016 BCSC 1847. (3) Most Favoured Nations Clause [33] A notable feature of the BC Settlement is its "Most Favoured Nations" ("MFN") clause or, more accurately, "Most Favoured Class" clause. It provides, in summary, that if additional compensation would have been paid had the class member been part of a settlement of the Ontario or Quebec Actions, the individual will be entitled to those additional benefits. The MFN clause is a one-way ratchet. Compensation payable to B.C. class members might go up through comparison to later settlements, but it will not go down. [34] The MFN clause is time limited in that it expires in one year. However, it is clear that it will at least capture the Quebec Settlement discussed above. Depending on the final distribution of funds under the Quebec settlement, B.C. class members may receive enhanced compensation by invoking the MFN clause. [35] The MFN clause grants the court certain powers to ensure its functionality: the Court shall have all necessary powers to implement and enforce this Section, and to order the Parties and the Claims Administrator to take such steps as may be required to enable Class Members and Derivative Claimants to obtain such compensation or additional compensation as may be owing under this Section, and to be notified of their rights to do so. [36] This clause is important, as there

already appeared to be some level of uncertainty as to how the Quebec lump sum settlement could easily be compared to B.C.'s claims-made settlement, particularly on behalf of individuals who have not yet had a revision surgery. [37] Class counsel relies on the following potential benefits of the MFN clause. While not opining on the potential future need for court direction, I accept for present purposes that there is a reasonable prospect of these benefits being achieved: a) to the extent that individual settlement values in Quebec end up higher than in B.C., B.C. class members should reap the benefit of this under the MFN clause (although the final outcome of the Quebec settlement will not be known until October 2021); b) to the extent that Quebec employs a different compensation pyramid structure, the MFN clause should work to the benefit of B.C. class members. For example, if the Quebec settlement distribution protocol has allocated money away from the median class member to benefit extreme cases, then B.C. class members at those extremes should receive the benefit of those allocation decisions; c) The Quebec Settlement recognizes two compensation categories not found under the B.C. settlement. It offers $2,500 to claimants who have not had a revision surgery, although such claimants must renounce any claim to additional compensation if they subsequently receive the surgery.

It also offers compensation to patients medically precluded from revision on par with a Category 1 revised claimant. These claimants may be entitled to benefits using the MFN clause, although the mechanism remains to be assessed. [38] This is a convenient point to note that the B.C. Settlement also has two categories of compensation not found in the Quebec Settlement, which work to the benefit of B.C. class members. First, the B.C. Settlement pays in-trust claims of spouses valued at $5,000. Second, as noted above, the B.C. Settlement provides a partial refund on the cost of the implant to class members who paid out-of-pocket. [39] It should also be noted that the timing of the B.C. Settlement creates an advantage in that if a B.C. class member is not satisfied with the potential settlement amount, they still have the power to opt-out. Given that the Quebec class was authorized many years ago, that right expired for Quebec class members, who are bound by the approved settlement. (4) Notice and Administration Costs [40] The defendants are responsible for the costs of notice and administration. (6) Estate Claims [41] Both estates and living plaintiffs are treated equally under the B.C. settlement. (7) Claims Administrator [42] It is proposed that the B.C. Settlement be administered by Crawford Class Action Services, a well-regarded and experienced claims administrator. (5)

Contribution towards Fees [43] The defendants have agreed to contribute up to $275,000, plus taxes, towards class counsel's fees, and up to $50,000 towards disbursements. On top of this amount, class counsel has requested a contingency fee of 25%. I will discuss this in more detail below. [44] The representative plaintiff and several class members signed retainer agreements with plaintiff's counsel that provide for a 33.33% contingency fee, plus taxes and disbursements. [45] To the date of the settlement hearing, the disbursements of plaintiff's counsel are $19,875.84. G. Government Recovery Claims [46] Notice of the proposed class action was provided to the B.C. Ministry of Health, pursuant to s. 4(1) of the Health Care Costs Recovery Act, S.B.C. 2008, c. 27 (the "HCCRA"). Class counsel were separately retained by the British Columbia Ministry of Health to pursue its direct and subrogated claim under the HCCRA, and has negotiated a separate agreement with the defendants to pay these health care claims. Compensation payable to class members under this settlement agreement is made without any deduction for health care costs. Class counsel will be paid a fee by the Ministry for their work on that separate matter. This fee is specified by a government tariff. [47] The Ministry has provided its written consent to the B.C. Settlement, as required by s. 5 of the HCCRA. [48] Following

the settlement approval hearing, and at the court's request, I was provided with an affidavit attesting to the fact that the amounts payable under the B.C. Ministry of Health settlement are "not materially inconsistent" with the settlement with the Ministry in the Zimmer litigation. III. ANALYSIS A. Class Certification [49] The test for certifying a class action is set out in s. 4 of the Class Proceedings Act, R.S.B.C. 1996, c. 50 (the "CPA"): 4 (1) The court must certify a proceeding as a class proceeding on an application under section 2 or 3 if all of the following requirements are met: (a) the pleadings disclose a cause of action; (b) there is an identifiable class of 2 or more persons; (c) the claims of the class members raise common issues, whether or not those common issues predominate over issues affecting only individual members; (d) a class proceeding would be the preferable procedure for the fair and efficient resolution of the common issues; (e) there is a representative plaintiff who (i) would fairly and adequately represent the interests of the class, (ii) has produced a plan for the proceeding that sets out a workable method of advancing the proceeding on behalf of the class and of notifying class members of the proceeding, and (iii) does not have, on the common issues, an interest that is in conflict with the interests of other class members. (2) In determining

whether a class proceeding would be the preferable procedure for the fair and efficient resolution of the common issues, the court must consider all relevant matters including the following: (a) whether questions of fact or law common to the members of the class predominate over any questions affecting only individual members; (b) whether a significant number of the members of the class have a valid interest in individually controlling the prosecution of separate actions; (c) whether the class proceeding would involve claims that are or have been the subject of any other proceedings; (d) whether other means of resolving the claims are less practical or less efficient; (e) whether the administration of the class proceeding would create greater difficulties than those likely to be experienced if relief were sought by other means. [50] The requirements for class certification in a settlement context are the same as they are in a litigation context although they "need not be as rigorously applied": Bellaire v. Daya, [2007] O.J. No. 4819 at para. 16 (S.C.). In particular, a proposed settlement agreement may assist the plaintiffs in establishing the preferability of the proposed procedure and it helps establish the existence of a reasonable going-forward plan, as required by ss. 4(1)(d) and (e) of the CPA. [51] No party, including the Intervenor, argues that this claim should not be

certified for settlement purposes for B.C. class members. I agree that the case is certifiable, as it follows a long list of product liability cases that have been certified in this jurisdiction, both on a contested and settlement basis: W.K. Branch, Class Actions in Canada (Toronto: Thomson Reuters, 2018) (loose-leaf revision 52), paras. 5.4-5.35. Most notably, this includes the Zimmer litigation, which dealt with similar hip implant issues. [52] I find that, subject to the multijurisdictional class issue discussed below, the class definition is proper. [53] The settlement agreement proposes a common issue as follows: "Were the ASR Implant Systems negligently designed?" Such a simple and direct question is consistent with those certified in other product liability cases, particularly in the context of proposed settlements. [54] I find that the proposed class representative, Mr. Wilson, is appropriate, and I see no evidence of conflicts of interest. [55] If this class was confined to B.C. residents, I would have no difficulty concluding that a class action is the preferable procedure. However, I find that the proposal to have the class extend beyond B.C., such that it would overlap with an existing certified class proceeding, creates preferability concerns. I address these concerns in further detail below. B. Settlement Approval [56] A class proceeding may be settled only with

the approval of the court. Without court approval, a settlement is not binding. [57] Section 35 of the CPA, provides: 35(1) A class proceeding may be settled, discontinued or abandoned only (a) with the approval of the court, and (b) on the terms the court considers appropriate. (2) A settlement may be concluded in relation to the common issues affecting a subclass only (a) with the approval of the court, and (b) on the terms the court considers appropriate. (3) A settlement under this section is not binding unless approved by the court. (4) A settlement of a class proceeding or of common issues affecting a subclass that is approved by the court binds every member of the class or subclass who has not opted out of the class proceeding, but only to the extent provided by the court. (5) In dismissing a class proceeding or in approving a settlement, discontinuance or abandonment, the court must consider whether notice should be given under section 20 and whether the notice should include (a) an account of the conduct of the proceeding, (b) a statement of the result of the proceeding, and (c) a description of any plan for distributing any settlement funds. [58] The CPA does not provide a specific test for settlement approval. Rather, the test has been developed by the courts. The guiding principle is that a settlement must be "fair and reasonable and in the best interests of the class as a whole": Cardozo v. Becton, Dickinson and Company, 2005 BCSC 1612 at para.

16. While each class member is likely to have their own individual views of any settlement, the court is required to consider the collective interest when reviewing a settlement. [59] The law was summarized as follows in Bodnar v. The Cash Store Inc., 2010 BCSC 145: [17] The standard for approval of a settlement is whether, in all of the circumstances, the settlement is fair, reasonable and in the best interest of the class as a whole. The court need not dissect the proposed settlement with an eye to perfection. Rather, the settlement must fall within a range or zone of reasonableness to be approved . [18] The court must consider the risks and benefits associated with continuing the litigation in deciding whether to approve the settlement. The question for determination is whether there are any disadvantages to the settlement that justify its rejection . [19] The court is not entitled to modify the terms of a negotiated settlement. Its power is limited to approving or disapproving the settlement reached by the parties . [20] The recommendation and experience of counsel are significant factors for consideration on an approval application. There is a presumption of fairness when a proposed settlement is negotiated at arm's length by class counsel and presented to the court for approval.... [21] The court may take into account evidence of expected participation in the settlement

by class members when determining the sufficiency of available settlement funds . [Citations omitted.] [60] Public policy favours the settlement of complex litigation. There is a strong presumption of fairness where a settlement has been negotiated at arm's length. Experienced class counsel is in a unique position to assess the risks and rewards of the litigation and his or her recommendations are given considerable weight by the reviewing court: VitaPharm Canada Ltd. v. F. Hoffmann-La Roche Ltd. (2005), 74 O.R. (3d) 758 (S.C.J.) at paras. 111-114, 144. [61] Factors to consider when assessing the reasonableness of a settlement are set out in Fakhri v. Alfalfa's Canada, Inc., 2005 BCSC 1123 at para. 8: 1. the likelihood of recovery, or the likelihood of success; 2. the amount and nature of discovery evidence; 3. settlement terms and conditions; 4. recommendations and experience of counsel; 5. future expense and likely duration of litigation; 6. recommendations of neutral parties, if any; 7. number of objectors and nature of objections; 8. presence of good faith and absence of collusion; 9. degree and nature of communications by counsel and the representative plaintiffs with class members during litigation; 10. information conveying to the court the dynamics of, and the positions taken by the parties during the negotiation. [62] I consider the most relevant of these factors

below. (1) The Likelihood of Recovery or Success [63] Based on the evidence and submissions at the certification hearing, there is certainly a risk that the plaintiffs would not be successful at the common issues trial. The higher the risk of a loss, the more reasonable settlement becomes. [64] A helpful summary of the potential risks of this litigation is provided by the Australian court that approved the group settlement discussed above. Justice Wigney wrote, in Stanford at para. 46: This short and highly simplified summary of the evidence and issues in the litigation serves to illustrate that the applicants and group members faced a number of factual and legal hurdles at the trial. They were by no means assured of success in respect of the common issues concerning liability. Nor could it confidently be asserted that, even if liability was established, damages would necessarily be assessed in the amounts contended by Mrs. Stanford and Mr. Dunmore. The reasonableness of the proposed settlement must be considered in the context of the significant litigation risk faced by the applicants and group members in this difficult case. [65] Closer to home, the risk of taking these types of cases to trial is illustrated by the result in Andersen v. St. Jude Medical Inc., 2012 ONSC 3660, where the class in a case regarding allegedly harmful heart valves lost after a month's long

trial. [66] Further, even if successful at trial, the plaintiffs face the prospect of lengthy appeal efforts, and individualized proceedings. (2) The Amount and Nature of Discovery Evidence [67] This action settled at the pleadings stage without documentary discovery. Plaintiff's counsel had, however, gathered the medical records and personal stories of class members to understand their injuries. Furthermore, the circumstances of this litigation worldwide are publicly known, and there were settlements in other countries, including Australia and the United States, where cases went to trial. These other settlements were relied upon in negotiating a settlement in this case. [68] The plaintiff did provide expert reports from orthopaedic surgeons, Dr. Bassam Masri and Dr. Michael Tanzer, which illustrated that counsel had access to detailed information regarding the issues at play in this ligation. The fact that class counsel consulted with experts is a factor supporting the reasonableness of the settlement: Mignacca v. Merck Frosst Canada Ltd., 2012 ONSC 4931 at paras. 96-100. (3) The Settlement Terms and Conditions [69] As noted, the settlement agreement follows a claims-made approach. This structure has certain benefits for claimants: a) It allows claims to be paid as they are assessed rather than having to wait until other claims have been decided. This is an important factor

here, where the defendants' product was recalled several years ago, where many class member injuries predate that recall, and where members of the class are likely to be fairly advanced in age. b) It protects class members against the risk of proration which can occur in lump sum settlements. c) It provides transparency. That is, class members can review and consider the individual amounts specifically provided under this settlement agreement at this juncture, while they still have the right to opt-out if they are not satisfied with the amount they are likely to achieve. [70] However, in contrast, it should be noted that an advantage of a lump sum settlement is that, in the normal course, the defendant does not remain involved in the assessment of claims, and is not incentivized to reduce the number of successful claims. [71] Nonetheless, it is my view that the settlement terms proposed here are reasonable. They are within the range of those recently approved in a settlement involving a similar product in the Zimmer litigation: Jones; McSherry v. Zimmer GMBH, 2016 ONSC 4606; Major c. Zimmer Inc., 2016 QCCS 3093. [72] Furthermore, the unique MFN clause is of material benefit to the class, as illustrated by the fact that there are already benefits that will likely be achieved through the ability to test class member's recovery against that which would have been awarded under the

Quebec Settlement. [73] As noted above, both estates and living plaintiffs are treated equally under this settlement, which class counsel says is an important concession given the law on the survival of personal injury actions in this province: Wills, Estates and Succession Act, S.B.C. 2009, c. 13, s. 150(4). I agree. (4) Recommendations and Experience of Counsel [74] Counsel for the plaintiff is very experienced in personal injury class actions, and recommends the settlement. (5) Future Expense and Likely Duration of Litigation [75] I am satisfied that if a common issues trial were necessary, it would likely extend for many months and be followed by appeals that could delay a final decision for a number of years. (6) Number of Objectors and Nature of Objections [76] The only objection comes from the Intervenors, whose concerns I consider below in the context of reviewing the multijurisdictional class issue. [77] Conversely, there was specific support provided for the settlement by five class members. (7) Presence of Good Faith and Absence of Collusion [78] The evidence from Mr. Wilson is that the decision to pursue settlement negotiations was client-driven. After years of waiting for compensation, and seeing compensation paid in other countries, Mr. Wilson did not want to wait any longer. This proposed settlement is also said to be a response to the potential downside risk of

a trial in Quebec over which he had no control. [79] That said, I had some concern about whether I could fully assess this factor given the complexity created by the independent settlement with the B.C. Ministry of Health. In particular, I had some concern that there was at least a theoretical possibility that class counsel could have traded off recovery for the class for the benefit of counsel's separate settlement for its co-client Ministry. However, following the hearing I was provided with a supplementary affidavit confirming that the settlement negotiated with the Ministry was within the same relative range as that negotiated and approved in the Zimmer litigation. On this basis, I am prepared to conclude there were no improper trade-offs. However, as a caution in relation to future applications, the parties should provide full disclosure on this issue at the outset of the application so that the court can properly assess this issue where class counsel is wearing two separate hats. (8) Conclusion on Merits of Settlement [80] Having regard to the factors referred to in these reasons, and subject to my discussion of the multijurisdictional issue below, I find that the settlement agreement in this case is fair, reasonable and in the best interests of the B.C. resident class. [81] Testing the terms achieved here with those achieved in other jurisdictions: a) The Australian

settlement provides some comfort that the present settlement is within the range of reasonableness, although the terms obviously differ. It must be noted that the Australian settlement was only achieved after trial had taken place and the decision was under reserve. b) The U.S. Settlement also provides some level of comfort in that it involves a similar claims-made structure. Although the base amounts payable are higher, the uncertainties and associated risks for defendants created by the U.S. jury system, as well as the heightened level of punitive damages to which defendants are exposed, are well known. I cannot fault the plaintiff for achieving benefits in Canada that do not precisely meet those achieved in the U.S. Again, the result in the U.S. was only achieved after two trials. c) The Quebec Settlement has certain advantages and disadvantages when compared to the B.C. Settlement, but given the terms of the MFN, the B.C. class should see the benefit of the advantages without the disadvantages. C. The Multijurisdictional Issue [82] This settlement was initially designed to be made available to all Canadians on an opt-in basis. In light of the approval of the Quebec settlement, it was amended to delete the opt-in right for Quebec residents. However, it is still intended to be made available to residents outside of B.C. and Quebec on an opt-in basis. [83] This issue arose at

a particularly awkward point in the evolution of B.C.'s CPA. The Class Proceedings Amendment Act, 3rd Sess., 41st Parl., B.C., 2018, was given Royal Assent on May 17, 2018. However, its amendments will not come into force until October 1, 2018: B.C. Reg. 129/2018. The amendments remove all of the previous language that allowed for opt-in classes. [84] This is part of a general effort to move the B.C. statute towards a "national opt-out" structure. Whereas previously the CPA contemplated that extraprovincial class members could only participate if they specifically opted in, the amendments provide that class members throughout the country can participate in B.C. class proceedings on an opt-out basis. Coupled with this ability to certify national opt-out cases are provisions designed to discourage a multiplicity of proceedings: see B.C. Legislative Assembly, Official Report of Debates (Hansard), 41st Parl., 3rd Sess., No. 126 (26 April 2018) at 4284. [85] As such, were these amendments presently in force, it is arguable that there would be no authority to issue the proposed order, since the order contemplates using an opt-in class structure that would no longer exist. Given that these amendments have not yet come into force however, this motion falls to be considered under the current version of the CPA, which still allows for opt-in classes. [86] That said, I am still entitled

to consider whether providing for an opt-in class is the preferable procedure under s. 4(1)(d) of the CPA. Put simply, the difficult question for the Court in this case is whether the existing Ontario Action is the preferable procedure for the resolution of the claims of those class members from outside B.C. and Quebec. For the reasons discussed below, I believe that it is. To summarize, my concerns are the following: a) the creation of overlapping classes; b) the disruption of counsel agreements created to maintain order in the face of overlapping classes; c) the negative effect on the principle of judicial comity; d) the disruption and confusion created in solicitor-client type relationships; and e) the potential encouragement of "race to the bottom" settlements. [87] Framed more directly into the language of the statute, I find that the existence of the Ontario Action engages concerns under each of the following factors that must be considered under s. 4(2) of the CPA: (c) whether the class proceeding would involve claims that are or have been the subject of any other proceedings; (d) whether other means of resolving the claims are less practical or less efficient; (e) whether the administration of the class proceeding would create greater difficulties than those likely to be experienced if relief were sought by other means. (1) Overlapping Classes [88] Starting with s.

4(2)(c), it is clear that if this claim is extended to persons outside B.C., it will engage "claims that are or have been the subject of other proceedings", specifically, the Ontario Action. I am unable to find a sufficient basis to certify a second action covering the same ground as the Ontario Action. While I accept that there have been cases that have allowed overlapping classes, I see no reason to create such duplication here. [89] The parties note that an overlapping class was certified in Jiang v. Peoples Trust Company, 2018 BCSC 299. However, the circumstances there were unique, in that the overlapping class raised two distinct causes of action based on two local acts in two local courts: para.

63. Here, the overlapping classes raise the same cause of action, and do not rely on local statutes in their respective local courts. [90] The parties also cite Silver v. IMAX Corp., 2011 ONSC 1035 at paras. 61-65, as further authority for allowing overlapping classes. However: a) I note that the Ontario court in that case was the first court to certify, and that the referenced Ontario decision simply settled the order and the notice. Hence, that case did not have to squarely face the comity issues before this Court, the second court asked to certify overlapping claims. b) The court which more directly faced the comity issue would have been the later-certifying U.S. court. However, comity ties are less binding in the international context: Morguard Investments Ltd. v. De Savoye, [1990] 3 S.C.R. 1077 at 1098. c) With respect, the Silver decision did not wrestle with the practical complications that I discuss below. d) The assessment of preferability contains a large element of discretion such that I do not need to declare that the outcome in Silver was wrong on the facts before that court. e) I am not bound by a superior court decision of another province in any event. [91] Finally, the defendants rely on the so-called "Vioxx litigation" as an example of overlapping classes being allowed to proceed: Tiboni v. Merck Frosst Canada Ltd. (2008), 295 D.L.R. (4th) 32 (Ont. S.C.J.),

aff'd 95 O.R. (3d) 269 (Ont. Div. Ct.). With respect, the Vioxx litigation is generally recognized as an example of the interjurisdictional chaos that can develop when overlapping cases are allowed: Scott Maidment, "Exclusive Forum Selection in National Class Actions: A Common Issues Approach" (2009) 5:2 Can. Class Action Rev. 133at 138-143; Sandra Rubin, "Duelling Benches", The Globe & Mail, (25 June 25 2008), online: <www.theglobeandmail.com>. Indeed, in ending the overlap by denying certification, the Saskatchewan Court of Appeal, while not having to rule directly on the issue, did identify "the potential for chaos and confusion" as a result of overlapping classes: Merck Frosst Canada Ltd. v. Wuttunee, 2009 SKCA 43 at para. 16. [92] For the reasons expressed above and below, I find that the creation of overlapping classes should generally be avoided, barring unique circumstances. It is not preferable to sow "chaos and confusion". (2) Disruption of Counsel Agreements [93] I am concerned about the extent to which certifying overlapping classes would affect the administration of justice under s. 4(2)(e), both on the particular facts of this case, and in class actions generally. [94] Looking to the history of this case specifically, the Intervenors say that after they became aware of the present action in January 2012, they had discussions with class counsel, Mr. Klein, whereby

he indicated that he would in fact limit the B.C. class to residents of B.C., leading the Intervenors to advance their case on behalf of all persons resident outside of Quebec and B.C. [95] There is evidence that on January 30, 2012, Harvin D. Pitch of Teplitsky, Colson LLP emailed Mr. Klein with the following proposal: david : here is our proposal to deal with our national class definition and your class action. We want to ensure that our national class definition and any settlement is clear with respect to BC. We propose that our class action will not include residents of BC who received an implant of the product anywhere in Canada but were residents of BC at the time of implant. So if a BC person had in implant in Montreal but was a resident of BC when that was done, he is in your class. that same principle will apply to our Nation Class( other than BC and Que.) in that we will only be covering residents of the other Provinces-but no matter where they got the implant. let me know if this is acceptable [96] In his reply email of the same date, Mr. Klein stated: That works for us. We've also been retained by the B.C. Ministry of Health on their claim for recovery health care costs. Let us know if there is anything we can do to assist. [97] The conduct of the parties thereafter is consistent with this exchange. Even though the B.C. action still nominally purported to have

national intentions, the plaintiff did not seek to intervene when both the Quebec and Ontario orders certified cases that chipped away at the proposed class. Furthermore, the evidence from the plaintiff himself is consistent with there being such an agreement. He states that his counsel advised him that the recommended plan was to sit back in favour of the Quebec and Ontario actions. [98] The plaintiff's counsel did not deny this exchange, but essentially argued that, (1) this did not represent the formal co-counsel agreement often negotiated to regulate such matters, and (2) things change. [99] While I do not need to formally rule on the existence or terms of a contract between the Intervenors and Mr. Wilson, there was clearly a plan amongst Canadian class counsel for how this litigation would be conducted, and the proposed settlement is clearly disruptive to that plan. [100] The interjurisdictional chaos that can be caused by multiple class actions pursuing the same outcome has long been bemoaned: see Uniform Law Conference of Canada Civil Law Section, Report of the Uniform Law Conference Of Canada's Committee on the National Class and Related Interjurisdictional Issues: Background, Analysis, And Recommendations, (Vancouver, B.C., March 9, 2005). [101] Counsel cooperation is often an important tool that can minimize such disruption. But conduct initially consistent with

cooperation, which is then later undermined, is arguably worse that having no cooperation at all. Trust is undermined. Class counsel reviewing a decision sanctioning such "after the fact" undermining of earlier counsel arrangements may be discouraged from entering into formal or informal arrangements that would be to the advantage of the parties and the court from a judicial management perspective. I find that sanctioning such disruption is far from preferable. (3) Judicial Comity [102] I am also concerned about the effect on the administration of justice from the perspective of judicial comity. The court in the Ontario Action carefully considered the scope and definition of its opt-out "near-national" class, as outlined above. [103] The Ontario court necessarily concluded that the representative plaintiff could adequately represent that "near-national" class, a conclusion that incorporates the consideration of the suitability of counsel: Western Canadian Shopping Centres Inc. v. Dutton, 2001 SCC 46 at para. 41; Chartrand v. General Motors Corp., 2008 BCSC 1781 at paras. 96-110. I see no reason why I should question the conclusion of the Ontario court that the Intervenors and their counsel are adequate representatives of their certified class. Neither Mr. Wilson nor the defendants suggested there was any reason that I should call the conduct in the Ontario Action into question.

As stated in Hafichuk-Walkin v. BCE Inc., 2016 MBCA 32, leave to appeal ref'd [2016] S.C.C.A. No. 217: [55] We are satisfied that the motion judge was entitled to proceed, in the absence of cogent evidence to the contrary, on the basis that the Saskatchewan court hearing the Frey/Chatfield action will have the capacity and willingness to protect the interests of Manitoba residents by ensuring that they will receive adequate and timely notice to choose to opt into the Frey/Chatfield action, if they desire to do so. [57] Subject to resolving choice of law issues, we see little in the way of a legitimate reason for what are, in substance, "carbon copy" class actions involving the same plaintiffs, defendants, lawyers and allegations being allowed to proceed in two different jurisdictions once a final certification of a class action has occurred in one jurisdiction and all appeals of the certification are exhausted, as is the case here. To allow otherwise offends the principle of comity and exposes the parties and the courts to incurring the evils that a multiplicity of proceedings can give rise to in a multi-jurisdictional dispute. (4) Disruption to Existing Solicitor-Client Type Relationship [104] Not surprisingly, this issue is central to the Intervenors' submissions opposing the certification of an opt-in class. [105] The Intervenors say that they have a solicitor-client relationship with their class on the basis of the Ontario certification order and subsequent notice issued in 2014: Richard v. British Columbia, 2007 BCSC 1107 at para. 42, aff'd 2008 BCCA 53; Fantl v. Transamerica Life Canada, 2009 ONCA 377 at para.

61. The Intervenors say that any communication with their clients required to effectuate this settlement is both unethical and an effort to go behind the terms of the Ontario certification order: The Law Society of British Columbia, Code of Professional Conduct, R. 7.2-6; Law Society of Ontario, Rules of Professional Conduct, R. 7.2-6. [106] The defendants acknowledge that a solicitor-client type relationship exists between Ontario class counsel and the proposed "near-national" class members, but they argue that this does not preclude this Court from certifying a national opt-in class. They suggest that Ontario class members may seek the advice of B.C. counsel on whether or not to opt-in to the B.C. Settlement, and that the notice of settlement approval can advise them that they can contact B.C. class counsel for more information. [107] With respect, this solution only highlights the potential for disruption with the existing solicitor-client type relationship. As proposed, an invitation will come in the form of a court-approved notice that invites represented parties to call a lawyer other than the lawyer appointed to act on their behalf by the Ontario court, in order to receive legal advice. Even if this is not a technical breach of the applicable rules of professional conduct given the unique construct of class proceedings, it is clearly disruptive to the existing

relationship in a way that I find would be confusing to class members. [108] The defendants argue that the Ontario Rules of Professional Conduct that restrict communications with a represented person apply to Ontario-based litigation, and not litigation in B.C. or elsewhere. Again, this only highlights the problem in that the regulatory framework has not "caught up" with the concept of national classes, leaving the courts to try and impose some order on the process: Richard (B.C.C.A.), paras. 24-25. [109] The Intervenors raise a related concern in that the proposed settlement could put the Intervenors' counsel into a conflict of interest given that their economic interests will be adversely affected if the Ontario class is diminished by Ontario class members opting into the proposed B.C. settlement. The economic viability of the Ontario Action was presumably premised on an assumption about the number of class members within the proposed class. Class counsel need to make a decision on whether to take on a retainer based in large part on the size of the potential class and the projected recovery of that class. [110] Granting certification of a class proceeding that disrupts that counsel calculus years after it was first performed will discourage future class counsel from commencing cases, which in turn could disrupt the pursuit of the purposes of class proceedings, being access

to justice, behaviour modification, and judicial economy: Western Canadian Shopping Centres at paras. 27-29. Counsel will have less confidence that a case they perceive as potentially carrying sufficient recovery to justify working without compensation for years, will in fact yield those uncertain rewards at the end of the day. (5) Encouraging "Race to the Bottom" Settlements [111] The Intervenors take an aggressive stance on this point, arguing that counsel for the plaintiff did almost nothing for a decade, but are now opportunistically reviving the B.C. action to cash in on a settlement that includes members of the certified Ontario class. [112] The Intervenors note that in McSherry v. Zimmer GMBH, 2012 ONSC 4113 at para. 83, the same B.C. counsel made the same argument that the Intervenors say should apply equally here: "the court should do something to discourage law firms from filing a class action lawsuit, doing nothing with it, and then reviving it when settlement talks begin in order to cash in on the settlement." [113] The Intervenors argue that the court should do what it can to avoid the so-called "race to the bottom", where defendants are incentivized to take advantage of overlapping actions in order to settle with the counsel prepared to offer the lowest settlement. [114] As noted above, I find that the basic terms negotiated here are fair and reasonable. I am not

concerned that the defendants have successfully located counsel willing to accept an improvident settlement for an overlapping class. Rather, based on the evidence before me, it appears that in this case there is simply a good faith disagreement between counsel about where the settlement should fall within the "range of reasonableness". [115] That said, approving an opt-in class here could encourage defendants to engage in such practices in the future, and hence it poses a present concern about whether granting the order in this case encourages the purposes of class proceedings outlined above. (6) The Rights of Other Provincial Governments [116] I had an initial concern that I did not have adequate information regarding the effect that certifying and settling the claims of an opt-in class would have on the rights of other provincial governments to pursue their subrogated or direct recovery claims, without submissions from these provinces: Perdikaris v. Purdue Pharma Inc., 2018 SKQB 86 and 2017 SKQB 287. However, this concern is largely obviated by clause 4.2(xii) of the B.C. Settlement, which provides that "Notwithstanding any other terms of this Agreement, the rights of Provincial Health Insurers are not compromised or released as a result of this Settlement Agreement." [117] It may have been preferable to give the other provinces notice of the hearing, given that the

agreement purported to speak to their rights. However, any residual concern is addressed by my decision below to constrain the class to B.C. That being said, counsel should be aware that courts will likely require full and complete disclosure regarding these subrogation issues on any future approvals raising similar national class issues. Counsel would be well advised to ensure that any potentially affected provincial government is given notice of such hearings. (7) Factors Supporting Certification of the Opt-in Class [118] The plaintiff and, more forcefully, the defendants, say that there is no prejudice to class members outside B.C. in that they are simply being provided an alternative. They can choose the BC Settlement, or they can stay in the Ontario class. The plaintiff also notes that providing access to the B.C. Settlement increases the speed in which class members will be able to recover, which supports access to justice. I agree that these are legitimate factors supporting the granting of the proposed order. However, I find that their force is outweighed by the concerns expressed above. (8) Conclusion on the Opt-in Class [119] I find that it is not the preferable procedure to include class members resident outside B.C. in this class. The preferable procedure, for all the reasons expressed above, is to defer to the previously certified Ontario Action. [120] There is one

exception to this finding. There were five individuals who opted out of the Ontario Action. Since there is technically no overlap in respect of those individuals, I find that an opt-in invitation can be extended to these persons. [121] Given that the court does not have the power on a settlement approval hearing to re-write the settlement on its own, it is important to note that the parties confirmed during the hearing that they were prepared to proceed with the settlement even if the class was narrowed to B.C. residents. This allows me to approve the settlement on that more limited basis. D. Counsel Fees [122] Section 38 of the CPA requires court approval of class counsel fees and disbursements. It has long been recognized that for the CPA to achieve its policy goals, counsel must be well rewarded for their efforts: Gagne v. Silcorp Ltd. (1998), 41 O.R. (3d) 417 at 422-423 (Ont. C.A.). [123] Contingency fees in the range of 33% have been recognized by Canadian courts as reasonable: Pro-Sys Consultants Ltd. v. Infineon Technologies AG, 2014 BCSC 1936 at paras. 53-56. In Cannon v. Funds for Canada Foundation, 2013 ONSC 7686 at para. 3, Justice Belobaba described such arrangements as presumptively valid. Indeed, for a complex product liability case a fee of up to 40% is permissible under Rule 8-2(1)(b) of the Law Society Rules: Stanway v. Wyeth Canada Inc., 2015 BCSC 983 at

paras. 54-55. [124] The representative plaintiff and other class members agreed to a 33% fee in this case. [125] With the settlement, class counsel seeks a contingency fee of 25%. They indicate that part of the reason they are able to lower their request from 33% is due to the fact that the defendant has proposed to pay $275,000 in fees immediately. This is a direct defendant contribution towards fees. [126] I am prepared to approve a 25% contingency fee with one adjustment and one caution. [127] A 25% contingency fee is reasonable on the facts of this case, noting that the settlement was negotiated prior to certification, without the need for any preliminary motions, and without having taken any formal discovery: see Class Actions in Canada, Appendix B: Chart of Approved Class Action Fee Percentages. [128] However, treating the $275,000 from the defendant as being paid "on top" of this reasonable fee percentage has the potential to make the actual final fee unreasonable. For example, if only 10 class members come forward, and they receive awards totalling $1,000,000, the total legal fees received would be $525,000 ($275,000 + (25% x $1,000,000)), or effectively 52.5% of the amount going to the class, which is far in excess of that allowed in the normal case under the Law Society Rules, let alone what a court would approve as reasonable. [129] Counsel did not provide their

hours or normal hourly rates, which may in some cases justify approving amounts in excess of standard contingency percentages, in order to ensure that counsel is recovering at least the base value of their time investment, or close to it. [130] In my view, in light of the arrangements already made, the reasonable approach in this case is to treat the $275,000 the defendants have agreed to pay on account of fees as a "down payment" on the approved 25% contingency fee. In other words: a) the $275,000 can be paid to class counsel immediately by the defendants; b) a 25% approved fee percentage can be deducted from each individual award as it is paid to that individual; c) but no additional money should flow to class counsel until after $1,100,000 in claims have been paid (i.e. when the $275,000 already paid represents 25% of the total amount awarded). [131] In terms of the caution, I have grave reservations about the practice of defendants paying legal fees direct to class counsel, for the following reasons: a) It perverts the solicitor-client relationship between the class and class counsel to have a defendant inserting itself in the payment of legal fees. b) It perverts the court's ability to assess the reasonableness of the settlement, since it is almost impossible to determine whether the total amount payable to the class, or the terms offered to the class, would have been

higher or improved if the defendant did not agree to pay those fees to class counsel. c) It loosens the tie between the class and class counsel's interests. Class counsel may be somewhat less concerned about driving quickly and resolutely for the first or last dollar into each class member's hands, because they already have the security of the "bird in the hand" through the payment of at least some portion of their legal fees by the defendant. [132] All of these problems are avoided if class counsel simply seek a pure contingency fee payable from each award made to each class member. In that way, class counsel and the class' interests are tied together as tightly as possible, which ensures the most frictionless operation of the class proceedings statute. This is not to say that there may not be cases where such a direct contribution would be fair and reasonable, but I expect these situations to be unique or extraordinary. [133] That said, with the adjustment made to the fee payment structure, I am prepared to approve the 25% percentage fee proposed here as fair and reasonable. E. Notice Approval [134] There will have to be a further hearing to settle the language of the notice and the notice program, if only to accommodate my ruling on the reduced scope of the class. If all parties agree, I am prepared to receive submissions and a draft order in writing, reserving my right to

call for an oral hearing thereafter if necessary. [135] In terms of the notice, I have reviewed the proposed claim form. Although it is quite long and complex, plaintiff's counsel assured the court that they will make themselves available to every class member to assist them in its completion. I have relied on that commitment in approving the proposed settlement, and I instructed counsel that this entitlement to assistance should be made very clearly and expressly in any notice or other documentation accompanying the claims form. IV. CONCLUSION [136] In summary, I approve the settlement and the requested fees and disbursements as fair and reasonable, subject to: a) the restriction of the class to B.C. residents and those individuals who opted out of the Ontario Action; b) the required treatment of the defendants' contribution to the legal fees payable by the class, as outlined above; and c) the need to approve a revised notice program. "Branch J." ________ The Honourable Mr. Justice Branch